Capital Raising For Small Business Owners

Depending on where you live, who you talk to and what newspaper you read, we are currently either in a recession, about to emerge from a recession or already out of it.

Regardless, the landscape has changed for small businesses and probably irrevocably.
Whereas in the past, going to your local bank and asking for a loan to start your business was usually a fairly easy process, nowadays, it’s unlikely that you will be looked upon favorably. Now, don’t get the wrong idea here. I’m not suggesting you shouldn’t ask, but what I am suggesting is that you need a contingency plan or your business idea will not get very far. Make sure you have a good, solid plan. Check out http://bbbcubed.com for more adice on how to plan.

Consider the following.

Do I actually need any money? Can I do it with savings and cutting my startup budgets? It will depend largely on the type of business you are starting or running. A retail business is going to need a fairly large chunk of capital, but a small home based business run from a computer doesn’t need much. Ask yourself, do I need those nice, shiny new business cards?
Can I raise money from my family? It’s a risky proposition, perhaps the riskiest. My advice is to make sure some kind of legal arrangement is made and above all, treat the financing the same as if it were from a lending institution. No matter how solid the arrangement is thought, are if your business fails, the strain that will be placed on family relationships will be considerable.
Will the government give me money? Check into federal, state and local organizations such as the US SBA.

Can I fund my start up costs through credit cards? If longer term loans are eluding you, then look at credit cards, but remember, treat any credit card borrowing as strictly short term. The high interest rates will likely cripple your business if you aren’t careful. They should be used as an absolute last resource!
Finally, make sure that you have exhausted your own personal resources! It’s your business and before you ask others to risk their money on it, you need to maximize your own financial interest. Have a yard sale. Sell some shares. Sell the second auto.

Most importantly, in this brave new, financially challenging world, you need to get creative and think outside the square.